Virtual Captives

Take advantage of Virtual Captives provided by PrimeOutsourcing and be able to establish offshore operations in the Philippines that you have complete control of.

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Understanding Virtual Captives

Basically, in a full offshore outsourcing set up, the client assigns parts of their business operations to a service provider and allows the latter to handle the operations from end to end. As such, the execution of responsibility and the inherent risks involved are shouldered by the third-party provider. In order for this type of offshoring structure to successfully work, however, trust and proper relationship governance between the service provider and the client should be clearly established.

In the case of a captive set up, the client or parent company creates a dedicated resource base offshore (basically a wholly owned subsidiary) and retains full control of the business operations. One problem with this model is that the time frame to establish a fully-functional captive center may take longer and may entail large investments. Additionally, it is necessary for the client to be knowledgeable about the offshore operations of the chosen country and knows how to operate there.

We have come up with a diagram below outlining the pros and cons of the aforesaid offshoring structures and we also introduce an effective new business model called virtual captive, which offers some of the benefits of captive and full outsourcing and addresses the limitations of the two.

Offshoring Structures Comparison

Traditionally, companies that are looking to assign some of their services or operations offshore resort to two main offshoring structures: (a) by tapping into an offshore outsourcing service or (b) by setting up a “captive” entity in their chosen country.

Captives Offshore Outsourcing Virtual Captives
  • Significant reduction on overhead costs over the long-term
  • Retain managerial and operational control on all aspects of business
  • Fast setup process
  • Substantial savings as there is no capital expenditures involved
  • Insulates company from long-term risks
  • Leverage the on-the-ground resources and expertise
  • Longer set up time
  • Requires greater capital investment
  • Integration and alignment to parent company’s operation may take time
  • Entails long-term commitment
  • Higher costs of operations
  • Lost of operational control and flexibility
  • Does not have ownership rights/authority
  • Shorter lead time for set up and quick ramp-up of operations
  • Significant cost reduction with no capital expenditures and lower monthly rates.
  • Complete control over operations
  • Flexible structuring
  • Access to specialized skills and leverage on supplier resources and best practices
  • Fully transparent pricing model
  • No long term commitment
  • Shared risks

Virtual Captives: The Key Outsourcing Solution

If neither captive nor full outsourcing can provide the specific requirements of your business, the best choice would be the virtual captive model. With this set up you, the client, can tap into PrimeOutsourcing’s inherent skills and knowledge of offshore operations to establish your firm’s operations in the Philippines. PrimeOutsourcing will then provide all the resources you need for your offshore firm to become fully operational, including manpower, infrastructure and assets.

What makes this model better than full outsourcing and captive models is the strategic control of the physical operations of the business is completely in your hands. That means you have free reign on the workflow processes, utilization of IT assets and tools and staff supervision. In short, virtual captive is a flexible offshoring solution that offers the best of both worlds.

Refer to the diagram below to get a full grasp of how your virtual captive operation in the Philippines will work.

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PrimeOutsourcing    Your Company     Joint

Virtual Captive as Foundation for Startup Ventures

Virtual captive can also be considered as an incubation- or foundation-type business model, which is especially useful for startup ventures but can be used by established companies as well.

On that note, PrimeOutsourcing’s virtual captive service will serve as your platform to quickly and cost-effectively test offshoring operations in the Philippines. Once underway, you may decide to completely transfer the entire operation to your own Philippine-based company–especially if you are looking at expanding your business or if you have a steady stream of projects–or continue working with PrimeOutsourcing. In most cases, clients settle for the latter option as it enables them to focus on their core operations and save them from the hassles of hands-on managing a Philippines-based firm.

Establishing Your Virtual Captive Center with PrimeOutsourcing

Setting up a small-scale virtual captive center with PrimeOutsourcing follows the same process as our outsourcing services. For more extensive offshore operations, however, please refer to the steps below:

1. Criteria and Goal Assessment

Once initial contact is made, we will closely define your business objectives, goals and needs and discuss current processes and changes that you want to execute and align them with the capabilities of PrimeOutsourcing. Further discussion will be made so we can thoroughly assess your criteria when it comes to manpower, support, infrastructure and management requirements and processes.

2. Solutions Preparation

Once we have reviewed and get a full understanding of your scope requirements, we will work on a proposal outlining the service delivery, pricing and other processes involved in the offshore operation. We will then present it to you for review and approval. During this stage, back-and-forth discussions can be expected until an agreement is reached regarding the terms of service, strategy and deliverables as well as pricing.

3. Service Contract Signing

A detailed contract will be signed to formalize the agreement. The contract will cover the complete details of you